DFSA offers Innovation Testing Licence for FinTech firms

DUBAI, May 28, 2017

The Dubai Financial Services Authority (DFSA) has announced that it will allow financial technology (FinTech) firms to apply for a class of financial services licence referred to as an Innovation Testing Licence (ITL).

This initiative signals the next phase of the DFSA’s regulatory roadmap to foster innovation in Dubai, a statement said.

The restricted financial services licence will allow qualifying FinTech firms to develop and test innovative concepts from within the Dubai International Financial Centre (DIFC), without being subject to all the regulatory requirements that normally apply to regulated firms.

The DFSA will work with applicants to understand the business proposal and establish the appropriate controls for the safety of any customers involved, on a case-by-case basis.

Ian Johnston, chief executive at the DFSA, said: “FinTech is changing the landscape for financial services, providing more opportunities to seek financing and increasing financial inclusion. As regulators, it is our responsibility to provide a framework which supports the sustainable development of this industry while protecting consumers and financial stability.”

Johnston added: “Our efforts to develop a regulatory framework that promotes growth and innovation, while protecting financial stability and consumers, is part of our contribution to Dubai’s greater vision of becoming an information-based society and a smart city.”

FinTech firms will be able to use the restricted licence to test an innovative product or service for six to 12 months. In exceptional cases, the DFSA will consider extending that period. If a firm has met the outcomes detailed in the regulatory test plan, and it can meet the full DFSA Authorisation requirements, it will migrate to full authorisation. If it does not, the company will have to cease carrying on activities in the DIFC that need regulation.

The DFSA’s latest initiative follows the launch of the FinTech Hive at DIFC, which will bring together the next generation of leaders and entrepreneurs to compete and address the growing needs of the region’s financial services industry, using innovative technology solutions. It intends to catalyse growth and efficiency in a variety of areas including trade finance, alternative finance and Sharia-based services. – TradeArabia News Service